EL7.AI
StocksMedium•26 October 2026•
4 min read

Kotak Mahindra profit jumps 26% to 5,645 crore rupees in second quarter

Key Facts

1Consolidated net profit rose 26% to 5,645 crore rupees, compared with 4,468 crore in the year-earlier period.
2Net interest income increased 16% year on year to 8,459 crore rupees and rose 7% from the previous quarter.
3The net interest margin fell to 4.31% from 4.54% a year earlier; the bank attributed this largely to mobilisation of FCNR(B) deposits.
4Net advances were 5.77 trillion rupees and deposits were 6.51 trillion; excluding FCNR(B) deposits and the acquired loan portfolio, advances grew 19% and deposits 13%.
5The gross non-performing loan ratio fell to 1.04% from 1.39%, and the net ratio to 0.24% from 0.32%.

Kotak Mahindra Bank raised consolidated net profit 26% year on year to 5,645 crore rupees in the July-September quarter of fiscal 2027, compared with 4,468 crore in the year-earlier period, according to figures reported by Business Standard. The bank also reported growth in net interest income, the difference between what it earns on lending and pays on deposits. The results, however, cover two different measures: consolidated group profit and the bank’s standalone profit, which rose 29% to 4,212 crore rupees. The newspaper attributed the growth in standalone profit to lower provisions and higher net interest income. The results also showed pressure on the net interest margin, alongside growth in deposits and loans and improved asset-quality metrics.

Net interest income reached 8,459 crore rupees, up 16% year on year from 7,311 crore in the second quarter of fiscal 2026. Quarter on quarter, income rose 7% from 7,928 crore rupees in the first quarter of fiscal 2027. By contrast, the net interest margin fell to 4.31%, from 4.54% a year earlier and 4.53% in the previous quarter. The bank said the decline in the margin was largely due to the mobilisation of FCNR(B) deposits during the quarter. The bank raised about 55,344 crore rupees through these deposits and extended about 16,110 crore in loans through its international branches. This places part of the business growth in the context of foreign-currency deposit mobilisation, rather than attributing it entirely to domestic deposit growth.

Net advances reached 5.77 trillion rupees in September 2026, up 25% year on year, while total deposits stood at 6.51 trillion rupees, a 23% increase. Growth rates were lower excluding FCNR(B) deposits: advances rose 19% after excluding loans funded by these deposits and the loan portfolio acquired by the bank from Kotak Mahindra Investments, while deposits increased 13% after excluding FCNR(B) deposits. This means the reported growth rates include the effect of these deposits, as well as the acquired loan portfolio’s effect on advances. The figures did not establish that growth in loans and deposits offset the pressure on the margin. The current and savings account ratio to total deposits also fell to 38.2% from 42.3% a year earlier, and stood at 41.8% excluding FCNR(B) deposits. The loan-to-deposit ratio rose to 88.6% from 87.5% in the year-earlier period.

Loan-loss provisions fell 15% to 803 crore rupees from 947 crore a year earlier. The annualised cost of credit declined to 0.35% from 0.79% in the second quarter of fiscal 2026, while fresh slippages fell 24% to 1,230 crore rupees from 1,629 crore in the year-earlier period. The provision coverage ratio was 78%, compared with 77% a year earlier. These indicators were reflected in improved bad-loan metrics: gross non-performing assets were 1.04% of advances on September 30, 2026, compared with 1.39% on the same date a year earlier. The net non-performing asset ratio also fell to 0.24% from 0.32%. Standalone annualised return on assets was 1.92%, while return on equity was 11.65%.

At the group level, Kotak Securities posted a profit of 348 crore rupees, Kotak Mahindra Prime earned 251 crore, and Kotak Mahindra Life Insurance made 198 crore rupees. Fee and service income rose 21% annually to 2,926 crore rupees, adding another source of revenue alongside net interest income. Operating expenses, by contrast, increased 14% to 5,271 crore rupees during the quarter. Capital adequacy stood at 21.9% on September 30, 2026, while the common equity Tier 1 ratio was 21.4%. The figures accompany growth in the loan and deposit books, while the bank faces the continuing impact of FCNR(B) deposit mobilisation in the next quarter.

The bank said the full impact of FCNR(B) deposits may emerge in the third quarter, with the potential to be mitigated through liquidity deployment and repricing of loans linked to the repo rate. In trading on October 23, 2026, the bank’s shares closed down 1.49% at 430.50 rupees on the NSE, compared with the previous close of 437 rupees. The decline came on the day the quarterly results were published, according to The Economic Times. An earlier report published by EL7 on October 6 had pointed to 24.7% loan growth in the third quarter, according to its headline; that figure relates to a different period from the second-quarter results reported here. The third-quarter result is the next milestone for assessing the deposits’ impact on the margin, alongside the course of liquidity deployment and loan repricing.